TaxLawGHby MSL Business School
MSL Business SchoolTax incidence and households
Distributional Analysis of Ghana's Tax System
The GHATAX microsimulation model combines the seventh Ghana Living Standards Survey with a 2015 social-accounting matrix. It models the tax system at December 2022 and selected measures announced in the 2023 Budget.
Analysed and explained by MSL Business School through TaxLawGH.
Report in brief
Distributional Analysis of Ghana's Tax System
The GHATAX microsimulation model combines the seventh Ghana Living Standards Survey with a 2015 social-accounting matrix. It models the tax system at December 2022 and selected measures announced in the 2023 Budget.
Evidence boundary: These are model-based incidence estimates using historical household and economic data. They do not measure the exact liability of a present taxpayer or establish current tax law.
How the report works
Method and evidence base.
- Microsimulation of personal income tax and indirect taxes across household consumption deciles.
- Use of household survey data and an input-output framework to estimate taxes embedded in spending.
- Comparison of cash amounts and taxes as a share of household consumption.
- Simulation of selected 2023 Budget reforms against the model's historical baseline.
Principal findings
What the report's evidence shows.
Personal income tax was progressive
Modeled personal income tax rose from about 2.4% of consumption in the poorest decile to 10.3% in the richest. In cash terms, the richest decile paid about eighty times the amount paid by the poorest.
Indirect taxes were mildly progressive overall
VAT and associated levies were mildly progressive in the model, excises were regressive, and communications and petroleum taxes were generally progressive.
Combined taxes reduced measured inequality
The model estimates that personal income and indirect taxes together reduced the Gini coefficient by about three percentage points.
Tax burden rose across the distribution
Combined modeled taxes were about 14.1% of consumption for the poorest decile, 15.9% around the middle and 24.6% for the richest decile.
Taxes alone increased modeled poverty
Before accounting for the benefits of public spending, the model estimates that taxes increased poverty by roughly three percentage points.
Household gender patterns reflected income and spending
Female-headed households paid less tax on average, both in cash and as a share of consumption, reflecting differences in income and expenditure patterns in the underlying data.
Interpretation limits
Where the evidence should not be stretched.
Connection to current tax law
Use the study for analysis and the law for present treatment.
These are model-based incidence estimates using historical household and economic data. They do not measure the exact liability of a present taxpayer or establish current tax law.
Official report
Distributional Analysis of Ghana's Tax System
Institute for Fiscal Studies, Ministry of Finance and TaxDev
TaxLawGH has preserved the source copy used for this analysis while the official Ministry link remains the public source destination.
Frequently asked questions
Reading this report safely
Is this report a statement of current Ghana tax law?
No. It is a historical analytical report. Current treatment requires the legislation, amendments and commencement rules now applicable.
Who published the underlying report?
The report is published in the Ministry of Finance revenue-report library and attributes the work to Institute for Fiscal Studies, Ministry of Finance and TaxDev.
Can the report's estimates be applied to an individual taxpayer?
No. Aggregate and model-based findings explain the system or a historical period; they do not calculate a present taxpayer's liability.